July 2008 Flows
In a press statement issued today, Bangko Sentral Governor Amando M. Tetangco, Jr. reported that foreign portfolio investments that were registered with the Bangko Sentral in July 2008 exceeded capital repatriations, resulting in a net inflow of US$20.2 million. “Contributing to this positive development were the easing of oil prices, the strengthening of the peso and the improving fiscal position of the government,” the Governor said.
Registration of foreign investments with the Bangko Sentral entitles the investor to buy foreign exchange from the banking system for capital repatriation and remittance of dividends/earnings that accrue on the investments.
On a gross basis, registered foreign portfolio investments 1 aggregated US$577.3 million, 79 percent of which went to shares listed in the Philippine Stock Exchange (PSE). Investments in peso-denominated government securities and in money market instruments accounted for 20 percent and 1 percent, respectively. On the other hand, capital repatriations totaled US$557.1 million and were traced to withdrawals of investments in (a) PSE-listed shares (50 percent); (b) government securities (16 percent); and (c) peso bank deposits 2 (34 percent).
January-July 2008 Flows
For the first seven months of the year, transactions resulted in a net outflow of US$397.2 million versus the US$3.6 billion net inflow for the comparable period in 2007. The net outflow was traced to continuing risk aversion resulting from the tightening of credit market conditions sparked by the US subprime mortgage crisis, and the surge in prices of oil and other commodities. By type of instrument, investments in PSE-listed shares, peso-denominated government securities and money market instruments posted net inflows of over US$1.3 billion, US$0.6 million, and US$4.1 million, respectively, while placements in peso bank deposits showed a net outflow of US$1.7 billion.
Gross investment inflows totaled over US$5.8 billion during the period, constituting 59 percent of the more than US$9.8 billion recorded last year. Investments in PSE-listed shares of US$3.9 billion (62 percent of which went to telecommunications, property and holding firms) accounted for 67 percent of the total and were less than half the over US$8.1 billion level in the comparable period in 2007. Investments in peso-denominated government securities of nearly US$1.4 billion (23 percent) fell behind last year’s almost US$1.6 billion total by 13 percent from last year. On the other hand, placements in bank deposits rose by 285 percent to US$546.7 million to account for a 9 percent share of total investment flows. Placements in money market instruments made up the 1 percent balance. The United Kingdom, United States and Singapore remained the top three investor countries and collectively contributed 69 percent of investment funds during the period.
Meanwhile, gross capital outflows amounted to over US$6.2 billion, only slightly lower than the level recorded last year, and came from proceeds of withdrawals of investments from listed shares (41 percent of total), government securities (22 percent) and peso bank deposits (37 percent).
1 These statistics, which pertain to newly registered investments, are different from foreign portfolio investments in the balance of payments which represent actual flows during the period under review.
2 Largely represent temporary placements of sales proceeds from withdrawal of investments from listed shares and government securities.